Insight the Expert Certificate in Sustainable Finance of the Frankfurt School of Finance & Management – Focus on Sustainable Finance Disclosure Regulation

Insight the Expert Certificate in Sustainable Finance of the Frankfurt School of Finance & Management – Focus on Sustainable Finance Disclosure Regulation

Author: Julien Froumouth, ABBL, InFiNe.lu Grantee                                                                           

After being guided through the role of finance in enabling the transformation of our economies and society, different financial products available to support this transformation or transition, we have learned about the various types of investment strategies and methodologies that currently exist, the challenge of accessing the right data and finally how ESG ratings and labels would help in that regard.

For the time being, the most important trend students and stakeholders in the programme are witnessing is the launch of and the growing attractiveness for sustainable products, sometimes known as the so-called “article 8” and “article 9 products” by reference to the Sustainable Finance Disclosure Regulation. One common challenge faced by almost everyone is the difficulty to comply with the various regulatory deadlines, often interrelated or including many cross-references. According to Danielle Dandriatsimahafotsy, Investment Risk Manager at HSBC, setting the appropriate risk management framework and identifying the right tools and indicators to assess the materiality of the ESG risks for the institution remain a learning exercise as investee companies are not always reporting the data required.

Danielle’ daily work is being impacted as well. She must develop new skills and knowledge about ESG drivers that would impact existing risks categories, develop new appropriate risk management measures and techniques that would allow reconciling what the clients’ sustainability expectations and what the banks and its products will finally deliver and disclose.

Danielle has decided to follow the Sustainable Finance Expert programme of the Frankfurt School of Finance to further deepen its knowledge in the field of sustainable finance so that she could rapidly gain the necessary expertise to embed ESG in her daily tasks and responsibilities.

There is no doubt about climate change, environmental and social issues posing new challenges to the risk management of financial institutions. The various publications, recommendations and legislative initiatives in that field demonstrate how important emerging ESG risks drivers have become. The European Central Bank and other national regulators and supervisors are expecting banks, asset managers or insurance companies to assess the materiality of climate-related risks and to review their strategies and risk management framework with the objective to be more resilient to sustainability factors on one hand, and to better contribute to EU sustainability objectives on the other hand.

Without no surprise, the exchanges I have with other students, the professors and the professionals of the financial sector confirms this strong correlation between ESG risks and the necessary transformation of the business models of financial institutions.